Last week was somewhat of a disaster for my company. Not a real disaster but it’s rare that things go wrong and this time, several things went sideways.

First things first, we had a major server problem, so you might end-up getting my “Epic Shiz of the Week” from November 25th as my latest post on the homepage for a good 2 weeks. Which also means that you have missed several great posts such as my record online monthly income, my plan to make 10k/month from my online company and 6 tips for financial advisors. The worst part is that I was stuck in an annual meeting for 2 days so I was completely useless and unable to solve this problem, thx to my partner who handled everything ;-D

And… we have our iPad 2 winner from our TFB 5th Anniversary giveaway: Dick! Thx Dick, the email has been sent to you!

Then, what annoyed me the most was losing a deal. I lost a great auction on Flippa (thx to Sustainable Personal Finance for sending me the auction link in the first place!).

The Auction on Flippa

The good thing about Flippa is that it’s public, so I can comment on the site auction as I wish ;-). The site for sale was 20smoney.com (you can read the full listing here).

I was pretty excited about this site for sale as it had several components that I research before buying a blog:

The cool thing about Flippa, from a buyer’s perspective, is that you can follow the auction you want via email once you put it on your “watch list” or once you have made a qualified bid. So last Thursday, when the auction was supposed to end in 5 days, I got an email saying that the sale had closed for $14K!?! What the…. ????

So here’s what happened; the guy got an offer that he liked (probably through a PM) and a few minutes after the bid went public, the offer was accepted and the auction was closed. There wasn’t any “buy it now” on this auction at anytime. Therefore, the guy simply closed the auction before knowing if anybody would pay more for his site.

The site valuation

If you have been following my series on how to buy a blog, you will get a pretty good idea of how much this site could be worth on the market. The site was averaging between $800 to $1,000 (most likely to make $1,000 per month) for the past 12 months. The traffic wasn’t hit by the Panda updates and the PR was impressive for a financial blog (most sites have a PR 3 or PR 4). The only downside is that the biggest chunk of income was coming from private advertisers which is always debatable when you consider the value of the blog.

However, if you want to follow the industry’s standards; you would be tempted to value this blog anywhere between $14,400 and $24,000. Why? Because you should consider 18 to 24 months for such type of blog and 18 * $800 is the $14,4K while 24 * $1,000 is the $24K. In any case, selling at 14,4K was probably the lowest valuation possible for this site. Up to $24K, I would have been comfortable bidding on this site. With a solid plan, I would have been able to generate a net profit of minimum $400 per month, which corresponds to a 20% net return on my investment with no time involved (as I would be hiring someone to manage the blog from A to Z).

Unfortunately, the guy accepted the offer way too fast, I lost the deal and he potentially lost 10K. That’s a very sad story! But at least, you can learn a few things from this story. So if you are considering selling your site on Flippa, here are a few tips:

#1 Never End The Auction Before The Closing Time

I’ve seen several sites have their bids increasing dramatically in the last few hours of the bidding process. One thing you might not know is that when you are about to reach the auction time limit and you make a bid 5 minutes before it ends, the auction extends for an additional 4 hours to let other potential bidders respond. So if you close the auction before the end, you are almost sure to leave money on the table. On the other hand, there is no advantage im closing the auction early; once a bid is accepted, it stays valid until the end of the auction.

#2 Share as Many Details as Possible

When you put your site for sale, it’s not the time to be shy about it. It’s the time to give all your info away to make sure that you motivate a maximum number of buyers. For example, don’t be shy to share 12 months of Google Analytics stats. 1 or 2 months is not enough in my opinion.

The same thing applies when we talk about income. Show as much proof as possible and prepare documents for the buyers (like link expiration and complete advertising stats and contacts). Mention that you have these documents ready once the site is sold. When you can provide a monthly average of each source of income, you’ll have better chances in attracting advanced buyers (who have the most cash by the way 😉 ).

#3 Describe Expenses

Most people forget to disclose how much it costs to run the site. If you have no costs and run everything by yourself, just share this info. But if you are paying for proms or writers, it is also important to mention it during the auction.

#4 Be specific

When you post info, be specific. We are in a numbers game and we need clear answer. If buyers have to ask 10 questions because there is not enough info on the listing, it will feel like you have something to hide. And nobody wants to buy from someone who’s hiding things, right?

#5 Explain your Reserve or Buying Price

Before you put the site for sale, you need to establish a minimum price where you want to let it go. You can use this number as a basis for negotiation and explain your own valuation of the site. When I make a private offer on a site, I usually outline the strengths and weaknesses I’ve found in order to explain my valuation model. When you sell, you should explain where the value of your site is and how much it worth.

#6 Things to Avoid Saying

Don’t say your site has potential… blah blah blah! If you have so much potential, how come you haven’t developed it? This is like saying; I could make a fortune from my site but would rather see someone else do it for me. It’s up to the buyer to see potential or not, but it doesn’t bring anything on the table when it comes from the seller!

If you don’t have a great reason for selling your site, forget about the “I have more important ventures to take care of”. We know it’s not true most of the time. While you should obviously avoid saying that you are bored to death and can’t keep up with blogging anymore, you can simply mention that it is time for you to cash in your efforts.

#7 Never Close The Auction Before It Ends

Oh yeah… wait… that was the #1 tip, right? Well if you remember the first thing and the last thing from this article, you will remember the most important thing: don’t end the auction before it closes! Oh well, now, I’ve got to hunt for another site to buy, anyone interested in selling? 😉

haha – I thought it was you that bought it up and made the auction end before the time limit. I was keeping an eye on it (not because I have that kind of money) because I was just curious what that kind of site would go for. Plus, it’s in the same niche as mine and if I had another year or two under me, I may have considered it. There’s always next time.

the funny part is that I am usually way more aggressive when I want to buy a website. This time, I’ve decided (God knows why!) to be patient and wait until the end of the auction to enter in the dance…. oh man… I should have listened to my instinct and make an aggressive offer!

I have a serious addiction to watching online auctions and Flippa is great to watch. The questions and comments are always worth a look and it is pretty interesting to see what people will pay for different sites.

Hey Mike, you’re probably better off in this case. I looked into that site and it had more than a few signs of being hit by a Panda update, might be part of the reason he lost interest in updating it. Based on that, I would have been looking to keep it in the 4 digit range. Though if you could get it back in google’s good books, it could have been a value buy! 😉

[…] off this week is the Financial Blogger, who takes a look at a specific blog which he just missed out on buying. The blog sold for $14k, even though a moron like me could maintain it and make $1k per month on it. […]

You might have had better data then, but a quick compete look shows a drop in April, and increase, then a drop in October… all on major panda updates. Compete obviously isn’t as accurate as analytics though if you were looking at the right months.

So fascinating! 20smoney was on my top sites list for a long time before he stopped posting frequently. The thing is, he really does have a HUGE site at least of the ones he talks about publicly with much bigger potential than a money blog. For some of us, money blogs are awesome/amazing/obsess-worthy, but based on my conversations with friends and family about my blog, most people could care less (“Are we still talking about your blog? Jeez!”). His other site is about college football. Now we’re talkin’, bro! 🙂

[…] a solid writer and you’re willing to learn about running a business, blogging and/or buying and selling sites could be business investments for you. The best way to understand how to asses a website is to […]

[…] This plugin allow you to manage your Adsense code in a professional way. Imagine if you want to sell your blog one day (and it happens frequently these days!) but you have entered your Adsense code manually? […]